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"how do Sony and Microsoft avoid having their products become interchangable from the consumer vantage point?"

I think the question is, why should they avoid this? At the moment the combined 360/PS3 userbase makes most third-party PS360 multiplatforms a better choice for developers than the Wii/Ps2 multiplats. Alone they could struggle but together they are a pretty formidable opponent to the casual gaming juggernaut.

Personally I think this is a great thing. As a PS3 owner I have access to most great titles that are on the 360 and vice versa. I like BluRay and the far more sophisticated looks of the PS3. Other people want the better online capabilities of the 360. Adn both can play almost all of the best third-party games of this generation.